Goldman Sachs Boosts India GDP Forecast to 6.9% for CY24

Goldman Sachs has revised its GDP growth forecast for India for the calendar year 2024, raising it by 20 basis points to 6.9% from an earlier projection of 6.7%. This adjustment follows a stronger-than-expected GDP growth of 7.8% for the January-March 2024 quarter, driven by robust investment demand and a recovery in consumption.

Fiscal Year Projections

For the fiscal year 2024-25, Goldman Sachs projects India’s GDP growth at 6.8%. The Central Statistics Office (CSO) recently reported that India’s GDP grew by 7.8% in the fourth quarter of 2023-24, primarily due to a strong performance in the manufacturing sector.

Analysis and Expectations

Santanu Sengupta, Chief Economist at Goldman Sachs India, noted that despite the strong Q1 growth, lower sequential growth is expected in subsequent quarters. This outlook has led Goldman Sachs to revise its CY24 real GDP growth forecast to 6.9% year-on-year.

Fiscal Deficit Outlook

In a separate research note, Sengupta indicated that Goldman Sachs Research anticipates the Central government will achieve the 2024-25 fiscal deficit target of 5.1% of GDP, supported by higher-than-budgeted dividends from the Reserve Bank of India (RBI). The consolidated fiscal deficit for 2023-24 was 5.6% of GDP, lower than the revised estimate of 5.8%, due to expenditure cuts and higher-than-expected receipts.

Government Financial Management

The government’s overall expenditure was reduced by ₹50,000 crore compared to the Revised Estimate (RE), with subsidy payouts cut by ₹30,000 crore. Meanwhile, receipts were higher than the RE by ₹20,000 crore, driven by high non-tax revenues, including a substantial dividend from the RBI and public sector undertakings. The RBI announced a dividend of ₹2.1 lakh crore to the Central government, significantly exceeding the budget estimate of ₹1 lakh crore.